Christchurch is becoming a diverse city brimming with people enjoying the benefits of a place made equally by the people, government, and the private investment sector. As the rebuild is entering a new phase, to help ensure the city’s regeneration, we must be mindful of the changing economic landscape and act now to secure our future.
Since the earthquakes, Greater Christchurch’s economy has been fueled by billions of dollars of insurance money. This has contributed towards the $40 billion rebuild led by significant investment from both the public and private sectors – it could be said that Christchurch is involved in the biggest public-private partnership this country will ever see and we need to make sure it is a successful one.
Expenditure on Christchurch’s recovery is estimated to reach around $50 billion, when all is said and done. At the first Christchurch Leaders’ Forum this year, we celebrated an upcoming “Goldilocks” period of cranes filling the skyline and major public and private sector projects taking shape. It is a positive time for the city, but we must be mindful that funding sources are becoming exhausted. We are nearing the end of the insurance rebuilds, major banks are tightening lending criteria and the need to look further afield to fund the remaining rebuild is growing.
With commercial rebuild activity forecast to peak between now and the middle of next year, our people are enjoying new options for work and entertainment in the Central City. But for all the work, the empty sites remain. With insurance funds largely spent and the big banks responding to wider economic conditions, we need to look outside the box and confront the fact that without new funding streams the goal of having 20,000 people living in the central city is at risk.
Part of the challenge to attract investment to the Central City is to ensure our population presents a critical mass. Right now, there are 32.3 per cent (or 2,670) fewer people living in the central city than before the earthquakes, according to a recent Greater Christchurch Group report. Likewise, real estate and investment group JLL last month warned of a glut of retail and office space in the city, with retail vacancy at 16 per cent and vacant office space around 15 percent.
We know there is no shortage of capital in the international investment market; our job now is to make Christchurch an attractive proposition for those investors and developers. We can’t do this without a concerted effort to attract more people and businesses to the central city. The Government’s East Frame residential development of 900 homes form 2000 people is critical to this goal and it is essential that the project pushes ahead. Likewise, the public sector’s commitment to base head offices in new developments in the centre of town, including the health and justice precincts, is essential.
In addition to the wider public sector role, part of DCL’s job is to identify sources of private equity that can be matched to development opportunities. Acting as an investment and advisory arm of the Christchurch City Council, we have a significant job ahead to help pave the way for continued recovery. There are already good examples, such as progress on the Peterborough Quarter on the former Convention Centre site, but it is a big job that will require the combined effort of an entire city.
We need to articulate real opportunities to private investors and assist them to become part of Christchurch’s future. The time is now for us to reaffirm our vision for Christchurch and what we need to do to achieve it. Early work to develop and share a joint vision has already taken place and there is a job ahead for the new city agency Christchurch NZ to promote the wider city to the international marketplace.
We must open our doors and our ears to the market and understand what it will take to get investors on board. It means that, as a city, we need to act commercially and decide how we will encourage the private sector to deliver public benefits. DCL is planning to reach out to our investment and development partners over coming months to test the appetite for future opportunities and partnerships. What are the opportunities for them? How can they get involved? What are the stumbling blocks and what’s worked well in the past? We need to offer confidence, clarity and certainty to the market to fuel the next stage of the recovery.
For the city, there is a decision to be made about the role the public sector plays over the next 10 years. Do we tighten our collective belt and ride out the tougher economic times? Or do we seize the opportunity to bolster the city’s economy by bringing forward big public projects funded through inter-generational investment and leveraging private sector support?
It’s clear there are challenges ahead, but I’m mindful too of just how far we have come. From those devastating days and weeks following the 22 February earthquake, Christchurch has undertaken a monumental task and achieved much. Preparing to successfully navigate the challenges through smart investment attraction and decisions is essential if we are to deliver on our ideals for a new city.
CHIEF EXECUTIVE, DEVELOPMENT CHRISTCHURCH LIMITED (DCL)
Rob Hall is Chief Executive Officer of Development Christchurch Limited (DCL). DCL is a Council Controlled Trading Organisation charged with bringing a commercial focus to city investment and development activities.